Council tax bills could double on some homes under proposal

The Institute for Public Policy Research (IPPR) has recommended a 100% rise in council tax for those in the most expensive, band H homes, likely to be worth more than £1.5 million.

Rates on band F and G homes should also be raised by 50%, the IPPR said, while those in the cheapest council tax bands should have their tax bills slashed.

The overhaul could generate nearly £4 billion, the research claimed, £1 billion of which could be ploughed back into saving an average of £45 for the 80% of households with homes in the cheaper A to D bands.

The think tank added that this would rebalance the tax, which it said has become unfairly weighted, with those living in smaller, cheaper homes on average paying a larger amount proportionally.

It gave the example of residents in Kensington, west London, who on average pay less in council tax than people in Blackpool, while owning more expensive homes.

Aditi Sriram, economist at IPPR and lead author of the paper, said: “The current council tax system is unfair, inefficient, and long past its sell-by date.

“Our proposal cuts bills for the vast majority of households while asking those with the greatest property wealth to pay a fairer share.

“It’s a reform that supports working families, strengthens local services and lays the foundations for a fairer tax system.”

The IPPR also suggested a surcharge on foreign buyers purchasing UK homes should be raised from 2% to 6%, partly with the aim of deterring speculation in the housing market.

Property taxes overall need reform, which should include a full council tax revaluation by the end of the current Parliament, with a view to paving the way for a “proportional” property tax, the paper suggested.

Carsten Jung, IPPR associate director for economic policy and co-author of the report, said: “This reform can be a first step towards taxing property in a more balanced way.

“Millions of families would see a small decline in their bills – especially in less prosperous parts of the country – with more to come if the Government go for further reform.

“This is exactly the kind of policy we should expect from a Government relentlessly focused on reducing the cost of living.”